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Strategy Dynamics Course - Class 4a – Interdependence and feedback

This Class, on the strategic architecture, deals with content from Chapter 4 in both Strategy Dynamics Essentials and Strategic Management Dynamics. It is split into two parts – 4a, covering Interdependence and feedback and 4b, the strategic architecture – to make it more manageable:

  • Class 4a, explains what drives the rate at which resources change over time, including inter-dependence with existing resources.
  • Class 4b connects these relationships to the performance outcomes of an organisation to create a Strategic architecture of causal relationships that explain how the whole system works.

This class repeats the question "what causes what?" to identify what drives the growth and decline of resources. this discovers three reasons: simple decisions we take, such as "hire staff", external factors like economic conditions, and existing resources – sales staff win customers, for example. Those same three factors also impact performance directly, as well as driving resources to grow or decline. Price and marketing spend both affect current profits right now, for example, as well as affecting our ability to win and retain customers.

Because resource growth and loss rates depends in part on how much resource is already in place, making these links means we find interdependence and feedback. This feedback can accelerate change, as when existing customers persuade others to buy from us, or when staff losses make life harder for staff who remain, leading to further losses – known as reinforcing feedback. Other feedback mechanisms can slow or stop change, for example when a fixed number of service people limit our ability to serve growing numbers of customers – this is known as balancing feedback.

Special cases of feedback and dependency arise when growth or decline of a resource depends directly on its own current quantity, or on some potential quantity, such as the number of potential customers or staff in a region.

Key issues addressed

  • The three types of factor driving resource gains and losses – decisions, external factors and existing resources
  • How those same three items also affect immediate performance
  • How interdependence causes feedback that can both drive growth and constrain it
  • The simple representation of feedback loops – and the limitations of what they can tell you about performance over time
  • How a resource’s growth or decline can depend on its own existing quantity, as well as on other resources.
  • How potential resources such as customers or staff can both enable and limit our ability to capture resources
  • The "diffusion" of products or services into a potential new market.
Class 4a.0 - Interdependence and feedback. Summary - (25 min)
How decisions, external factors and existing resources influence growth and decline of resources, as well as immediate performance.
Class 4a.1 - Feedback - (14 min)
The self-reinforcing or limiting effects that can arise when growth and decline of a resource depends on its own current quantity.
Class 4a.2 - Self-dependence, potential resources and product diffusion- (15 min)
The impact these factors have on growth – including the Bass Diffusion Model of new product adoption.
This course is supported by a series of worksheets provided in both PDF format and as Sysdea online models.
Three Sysdea models are used to demonstrate issues in the summary segment and links are provided here if you are enrolled.
Two Sysdea models are used in class 4a.1 looking at simple feedback the impact of feedback on customer growth and decline in the Ryanair case.
A Sysdea model demonstrating the Bass Diffusion model is are used in class 4a.2.

free access for teachers - login or register Additional materials are available to registered teachers as well as free access to the complete course. Login here or register here for more information.

No additional books are referred to for this class.
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